Meanwhile, Citywire + rated Ion-Marc Valahu, who runs the Clairinvest Cosmopolitan Global fund, said he sold his holdings in the car producers at the end of last year but the recent developments could potentially present an opportunity to buy on weakness.
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By Dalvinder Kular 15 Jan, 2016
Car shares in a spin: top managers react to the Renault raid
Shares in the French car-maker Renault dropped 22% on January 14 before recovering to close 10.3% lower, after news that police had raided their offices and seized computers.
The investigation sparked fears that Renault was potentially rigging vehicles to pass emissions tests in a similar way to the German car producer Volkswagen, which Renault has denied in a statement on its website.
The fallout from the raid has seen other car companies affected, with shares in fellow French group Peugeot falling 8%, while the world’s seventh-largest car maker Fiat Chrysler dropped 9.4% and Volkswagen slipped 5%, which takes its losses to 32.4% since the emissions fixing scandal erupted in September.
Citywire AA-rated Eric Bendahan is cautious about making rash decisions while the reasons for the raid and subsequent fallout are still being digested. He currently has a 3.13% allocation to Peugeot in his flagship fund, the Eleva European Selection fund, while France is the second largest country allocation at 19.3%.
He told Citywire Selector: ‘While we need to wait for the end of the investigations conducted by the French authorities for Renault to be fully confident, the fall today in the share price of French manufacturers looks excessive. Pricing and sales in Europe continue to surprise positively, and we expect positive margins and cash flow developments.’
Gear change
Meanwhile, Citywire + rated Ion-Marc Valahu, who runs the Clairinvest Cosmopolitan Global fund, said he sold his holdings in the car producers at the end of last year but the recent developments could potentially present an opportunity to buy on weakness.
‘I bought the auto and the equipment sectors in Europe in late September 2015 after the VW debacle as I thought the sector was oversold and the worries about VW were overdone. Thereafter, I started selling my position towards the end of December 2015 after a nice rally. Now I have no exposure to both sectors but I will be looking to get back in after a 20% selloff.’
‘If you are long the sector it is too late to sell, as we are only a few percentage points from the low we put in on September 2015. I think the support should hold and I would be looking to get back in,’ he told Citywire Selector.
Elsewhere, the equity team at German group Berenberg think the week-long gap between the police raid and the share price fall is significant and believe this actually shines favourably on Renault. No comment was made with regards to positioning.
‘Developments are difficult to call, and the market is very jittery. However, the raids were on 7 January and we have not heard anything from Renault or the authorities since. This is perhaps slightly positive as it has been a week since the probes, so Renault would have had to release a statement if it knew that a material issue was at stake,’ they said in an investor note.